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Bondable Lease

A bondable lease is a lease with no tenant termination or rent abatement rights, even after casualty or condemnation, so rent behaves like a bond coupon.

Bondable leases are prized in net lease investing because they are designed to behave like a fixed-income instrument. The tenant must keep paying rent regardless of casualty, condemnation, or business trouble at the location, and it generally cannot offset or abate rent. Lenders and investors tend to value that certainty. In practice there are degrees of bondability, so it is worth having an attorney read the lease for any termination rights, offset rights, or carve-outs that weaken the structure.

Related Terms

Lease Structures

Use Clause

The lease provision defining the specific business purpose(s) for which the tenant may operate the property.

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Lease Structures

Option to Renew

A tenant’s right to extend the lease for additional periods, usually at pre-set rent increases.

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